-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QDmYgYWlV+tVUzh4iaiEQZWKFy7bz2ocCpl32rx8YdaSYtxGDrHHTySOef7mLSP1 hNAMMY1wMMedBoGrZm0wnQ== 0001017386-02-000261.txt : 20021119 0001017386-02-000261.hdr.sgml : 20021119 20021119141333 ACCESSION NUMBER: 0001017386-02-000261 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021119 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GSL HOLDINGS INC CENTRAL INDEX KEY: 0001075082 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 760050046 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-25167 FILM NUMBER: 02832712 BUSINESS ADDRESS: STREET 1: 123 SOUTH LOS ROBLES AVENUE CITY: PASADENA STATE: CA ZIP: 92708 BUSINESS PHONE: 6263563888 MAIL ADDRESS: STREET 1: 6371 RICHMOND #200 CITY: HOUSTON STATE: TX ZIP: 77057 FORMER COMPANY: FORMER CONFORMED NAME: BETHURUM LABORATORIES INC DATE OF NAME CHANGE: 19981210 FORMER COMPANY: FORMER CONFORMED NAME: BETHURUM LABORATORIES LTD DATE OF NAME CHANGE: 20011206 10QSB 1 gsl_sept10q.txt SEPTEMBER 30, 2002 QUARTERLY REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended SEPTEMBER 30, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Transition Period From __________TO ___________ COMMISSION FILE NUMBER 0-25167 ------- GSL HOLDINGS, INC. ------------------ (Exact name of small business issuer as specified in its charter) BRITISH VIRGIN ISLANDS N/A - --------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 123 South Los Robles Avenue Pasadena, California 91101 - ---------------------------------------- ---------------------- (Address of Principal Executive Offices) (Zip Code) (626) 356-3888 --------------------------- (Issuer's Telephone Number) APPLICABLE ONLY TO CORPORATE ISSUERS Common stock, no par value, 8,643,088 issued and outstanding as of October 31, 2002 i INDEX PAGE ---- PART I - FINANCIAL STATEMENTS 1 ITEM 1. - FINANCIAL STATEMENTS 1 Consolidated Balance Sheets as of September 30, 2002 and as of December 31, 2001 2 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2002 3 Consolidated Statements of Stockholders' Equity (Deficit) 4-6 Consolidated Statements of Cash Flows (Unaudited) 7-8 Notes to Consolidated Financial Statements 9-14 ITEM 2. - MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION 15-17 ITEM 3. - CONTROLS AND PROCEDRES 17 PART II - OTHER INFORMATION 17 ITEM 2. - CHANGES IN SECURITIES AND USE OF PROCEEDS 18 ITEM 3. - DEFAULTS UPON SENIOR SECURITIES 18 ITEM 4. - SUBMISSION OR MATTERS TO A VOTE OF SECURITY HOLDERS 18 ITEM 5. - OTHER INFORMATION 18 ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K 18 SIGNATURES 19-23 EXHIBITS 24-27 ii PART 1 - FINANCIAL STATEMENTS ITEM 1 - FINANCIAL STATEMENTS GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and December 31, 2001 1 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Balance Sheets (Unaudited) ASSETS ------ September 30, December 31, 2002 2001 ------------- ------------- CURRENT ASSETS Cash $ 20,017 $ - Deposits 9,006 - ------------ ------------ Total Current Assets 29,023 - ------------ ------------ FIXED ASSETS, NET 2,241 - ------------ ------------ TOTAL ASSETS $ 31,264 $ - ============ ============ LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT) --------------------------------------------- CURRENT LIABILITIES Accounts payable $ 40,633 $ - Accrued liabilities 162,667 - Payable - related party 90,500 - Deferred revenue 10,000 - Note payable 50,000 - Note payable - related party 200,000 - Other liabilities 64,085 - ------------ ------------ Total Current Liabilities 617,885 - ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock; authorized 1,000,000,000 common shares, no par value; 8,643,088 and 1 share issued and outstanding, respectively 1,185,665 1 Additional paid-in capital - - Deferred consulting fees (127,163) - Deficit accumulated during development stage (1,645,123) (1) ------------ ------------ Total Stockholders' Equity (Deficit) (586,621) - ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 31,264 $ - ============ ============ The accompanying notes are an integral part of these consolidated financial statements. 2 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Operations (Unaudited) From Inception on For the Three For the Nine May 17, Months Ended Months Ended 2001 Through September 30, September 30, September 30, 2002 2002 2002 ------------ ------------ ------------ REVENUES $ - $ - $ - ------------ ------------ ------------ EXPENSES Depreciation 105 170 170 General and administrative 801,085 1,632,285 1,632,286 ------------ ------------ ------------ Total Expenses 801,190 1,632,455 1,632,456 ------------ ------------ ------------ LOSS FROM OPERATIONS (801,190) (1,632,455) (1,632,456) ------------ ------------ ------------ OTHER EXPENSE Interest expense (12,667) (12,667) (12,667) ------------ ------------ ------------ Total Other Expense (12,667) (12,667) (12,667) ------------ ------------ ------------ NET LOSS $ (813,857) $ (1,645,122) $ (1,645,123) ============ ============ ============ BASIC LOSS PER SHARE $ (0.10) $ (0.20) ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 8,554,036 8,098,610 ============ ============ The three and nine months ended September 30, 2001 are not presented because the inception date of the Company is May 17, 2001. The accompanying notes are an integral part of these consolidated financial statements. 3 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) From Inception on May 17, 2001 to September 30, 2002 (Unaudited) Deficit Accumulated Common Stock Additional Deferred During the ------------------- Paid-in Consulting Development Shares Amount Capital Fees Stage --------- --------- ---------- ---------- ----------- Balance at inception - $ - $ - $ - $ - Issuance of common stock for services at inception $0.00 per share 7,600,000 1 - - - Net loss from inception on May 17, 2001 through December 31, 2001 - - - - (1) --------- --------- ---------- ---------- ---------- Balance, December 31, 2001 7,600,000 1 - - (1) Recapitalization (Note 1) 400,188 (507,440) - - - Options to purchase common stock granted on January 8, 2002 as payment for consulting services - 407,885 - (407,885) - Common stock issued for cash at $1.00 per share on January 10, 2002 10,000 10,000 - - - Common stock issued for cash at $2.50 per share on January 10, 2002 2,000 5,000 - - - Common stock issued for cash at $2.50 per share on January 17, 2002 2,000 5,000 - - - Common stock issued for cash at $2.50 per share on January 20, 2002 5,000 12,500 - - - Common stock issued for cash at $2.50 per share on January 25, 2002 30,000 75,000 - - - --------- --------- ---------- ---------- ---------- Balance Forward 8,049,188 $ 7,946 $ - $ (407,885) $ (1) --------- --------- ---------- ---------- ----------
The accompanying notes are an integral part of these consolidated financial statements. 4 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued) From Inception on May 17, 2001 to September 30, 2002 (Unaudited) Deficit Accumulated Common Stock Additional Deferred During the ------------------- Paid-in Consulting Development Shares Amount Capital Fees Stage --------- --------- ---------- ---------- ----------- Balance Forward 8,049,188 $ 7,946 $ - $(407,885) $ (1) Common stock issued for cash at $2.00 per share on February 21, 2002 100,000 200,000 - - - Options to purchase common stock granted on April 11, 2002 as payment for consulting fees - 23,469 - - - Common stock issued for consulting fees at $3.00 per share on April 20, 2002 83,000 250,000 - (250,000) - Common stock issued for consulting fees at $1.00 per share on April 20, 2002 66,000 200,000 - (200,000) - Common stock issued for cash at $2.50 per share on April 22, 2002 10,000 25,000 - - - Common stock issued for consulting fees at $2.50 per share on May 20, 2002 30,000 75,000 - (75,000) - Common stock issued for exercise of options at $0.50 per share on May 21, 2002 120,000 60,000 - - - Common stock issued for exercise of options at $0.50 per share on May 23, 2002 50,000 25,000 - - - Common stock issued for cash at $2.50 per share on September 26, 2002 8,000 20,000 - - - Common stock issued for consulting fees at $2.00 per share on September 30, 2002 800 2,000 - - - --------- --------- ---------- --------- ---------- Balance Forward 8,516,988 $ 888,415 $ - $(932,885) $ (1) --------- ---------- ---------- --------- ----------
The accompanying notes are an integral part of these consolidated financial statements. 5 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Stockholders' Equity (Deficit) (Continued) From Inception on May 17, 2001 to September 30, 2002 (Unaudited) Deficit Accumulated Common Stock Additional Deferred During the -------------------- Paid-in Consulting Development Shares Amount Capital Fees Stage --------- ---------- ---------- ---------- ----------- Balance Forward 8,516,988 $ 888,415 $ - $(932,885) $ (1) Common stock issued for services at $2.50 per share on July 1, 2002 3,200 8,000 - - - Common stock issued for services at $2.50 per share on July 22, 2002 500 1,250 - - - Common stock issued for exercise of options at $1.00 per share on July 29, 2002 10,000 10,000 - - - Common stock issued for services at $2.50 per share on August 1, 2002 4,800 12,000 - - - Common stock issued for cash and services at $2.50 per share on August 8, 2002 1,000 1,500 - - - Common stock issued for cash and services at $2.50 per share on August 22, 2002 2,000 3,000 - - - Options to purchase common stock granted on September 6, 2002 - 200,000 - - - Common stock issued for services at $2.50 per share on August 1, 2002 4,600 11,500 - - - Common stock issued for exercise of options at $0.50 per share on September 11, 2002 100,000 50,000 - - - Amortization of deferred consulting fees - - - 805,722 - Net loss for the nine months ended September 30, 2002 - - - - (1,645,122) --------- ---------- ---------- --------- ----------- Balance, September 30, 2002 8,643,088 $1,185,665 $ - $(127,163) $(1,645,123) ========= ========== ========== ========= ===========
The accompanying notes are an integral part of these consolidated financial statements. 6 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Cash Flows (Unaudited) From Inception on For the Nine May 17, Months Ended 2001 Through September 30, September 30, 2002 2002 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(1,645,122) $(1,645,123) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation 170 170 Amortization of deferred consulting fees 805,722 805,722 Common stock issued for services 59,719 59,720 Options issued for services 200,000 200,000 Changes in operating assets and liabilities: (Increase) in deposits (9,006) (9,006) Increase in accounts payable 32,693 32,693 Increase in payable-related party 90,500 90,500 Increase in deferred revenue 10,000 10,000 Increase in accrued expenses and other liabilities 226,752 226,752 ----------- - Net Cash Used by Operating Activities (228,572) (228,572) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (2,411) (2,411) ----------- ----------- Net Cash Used by Investing Activities (2,411) (2,411) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Payment of notes payable (300,000) (300,000) Proceeds from notes payable 50,000 50,000 Proceeds from reorganization 500 500 Issuance of common stock for cash 500,500 500,500 ----------- ----------- Net Cash Provided by Financing Activities 251,000 251,000 ----------- ----------- NET INCREASE IN CASH 20,017 20,017 CASH AT BEGINNING OF PERIOD - - ----------- ----------- CASH AT END OF PERIOD $ 20,017 $ 20,017 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. 7 GSL HOLDINGS, INC. AND SUBSIDIARY (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Consolidated Statements of Cash Flows (Continued) (Unaudited) From Inception on For the Nine May 17, Months Ended 2001 Through September 30, September 30, 2002 2002 ------------- ------------- CASH PAID FOR: Interest $ - $ - Income taxes $ - $ - SCHEDULE OF NON-CASH FINANCING ACTIVITIES: Common stock options issued for deferred consulting fees $ 932,885 $ 932,885 Common stock issued for services $ 59,719 $ 59,720 Options issued for services $ 200,000 $ 200,000 The nine months ended September 30, 2001 is not presented because the inception date of the Company is May 17, 2001. The accompanying notes are an integral part of these consolidated financial statements. 8 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 1 - ORGANIZATION Effective January 8, 2002, Bethurum Laboritories, Inc. (Bethurum), and Global Starlink Group, Inc. (Global), completed a Plan and Agreement of Reorganization whereby Bethurum issued 7,600,000 shares of its common stock in exchange for all of the outstanding common stock of Global. Immediately prior to the Plan and Agreement of Reorganization, Bethurum had 400,188 shares of common stock issued and outstanding. The acquisition was accounted for as a recapitalization of Global because the shareholders of Global controlled Bethurum after the acquisition was completed. Global was treated as the acquiring entity for accounting purposes and Bethurum was the surviving entity for legal purposes. There was no adjustment to the carrying value of the assets or liabilities of Global Starlink Group, Inc. (Global) and its wholly owned subsidiaries, nor was there any adjustment to the carrying value of the net assets of Bethurum. All references to shares of common stock have been retroactively restated. On January 18, 2002,Bethurum changed its name to GSL Holdings,Inc. Also effective January 18, 2002, a 1 for 4 reverse split of the Company's common stock was effected. All references to shares of common stock in the accompanying condensed consolidated financial statements have been retroactively restated to reflect this reverse stock split. The accompanying unaudited condensed consolidated financial statements include the accounts of GSL Holdings, inc. and its wholly owned subsidiary, Global Starlink Group, Inc. All of the entities are collectively referred to as "the Company". NOTE 2 - BASIS OF FINANCIAL STATEMENT PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. The information furnished in the interim condensed consolidated financial statements include normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company's most recent audited 9 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 2 - BASIS OF FINANCIAL STATEMENT PRESENTATION (Continued) financial statements and notes thereto included in the December 31, 2001 Annual Report on Form 10-KSB. Operating results for the three and nine months ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. NOTE 3 - GOING CONCERN The Company's consolidated financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs to allow it to continue as a going concern. It is the intent of the Company to begin formal operations pursuing various business opportunities along with seeking transactions with existing operating companies. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 4 - NOTES PAYABLE - RELATED PARTIES On December 1, 2001 two notes payable were entered into by former officers of the Company, for a total of $350,000. These notes were to be paid as follows: $50,000 on or before December 31, 2001, $150,000 on or before March 1, 2002 and $150,000 on or before September 1, 2002. The notes were non-interest bearing unless default on payment occurred. At September 30, 2002, all scheduled payments had been made with these notes paid in full. During October, November and December 2001, a total of $200,000 was advanced to the Company by the shareholder of Global Starlink Group, Inc. This amount remains payable to the shareholder at September 30, 2002. Interest is imputed at 8% per annum and is due upon demand. Interest expense for the nine months ended September 30, 2002 is $12,000. NOTE 5- NOTES PAYABLE On May 29, 2002, the Company entered into a note payable for $50,000. This note bears an interest rate of 4% per annum and is due upon demand. Interest expense for the nine months ended September 30, 2002 is $667. On October 6, 2002, the Company paid $10,000 on this note payable and entered into a new promissory note that established a due date of January 31, 2003. 10 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 6 - MATERIAL EVENTS On January 8, 2002, the Company entered into two agreements for general consulting services with two separate individuals. The first agreement provides for services to be rendered through May 31, 2002, in exchange for compensation in the form of options to purchase 50,000 shares of the Company's common stock at $0.50 per share. At the time the options were granted, the Company was involved in a private placement to sell shares of its common stock at $2.50 per share. These options have been valued at $119,996 using the Black Scholes method as prescribed by FAS 123 and has been included as part of common stock value in the accompanying unaudited condensed consolidated financial statements. A related expense has been accounted for the full amount through September 30, 2002. These options were exercised on May 23, 2002, and resulted in $25,000 cash proceeds to the Company. The second agreement provides for services to be rendered through January 8, 2003 in exchange for compensation in the form of options to purchase 120,000 shares of the Company's common stock at $0.50 per share. At the time the options were granted, the Company was involved in a private placement to sell shares of its common stock at $2.50 per share. These options have been valued at $287,919 using the Black Scholes method as prescribed by FAS 123 and has been included as part of common stock value in the accompanying unaudited condensed consolidated financial statements. A related expense has been accounted for in the amount of $208,740 through September 30, 2002, with the remaining $79,179 reflected as deferred consulting fees at September 30, 2002 to be expensed over the remaining term of the consulting agreement. These options were exercised on May 21, 2002, and resulted in $60,000 cash proceeds to the Company. During the nine months ended September 30, 2002, the Company entered into various other consulting agreements with individuals to provide a variety of services to the Company. One of the new consulting agreements was for a term expiring on September 30, 2002, in exchange for compensation in the form of options to purchase 10,000 shares of the Company's common stock at $1.00 per share. At the time the options were granted, the Company continued to be involved in a private placement to sell shares of its common stock at $2.50 per share. These options have been valued at $23,469 using the Black Scholes method as prescribed by FAS 123 and has been included as part of common stock value in the accompanying unaudited condensed consolidated financial statements. A related expense has been accounted for the full amount through September 30, 2002. These options were exercised subsequent to September 30, 2002. 11 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 6 - MATERIAL EVENTS (Continued) An additional agreement provides for services to be rendered for a twelve month period beginning May 20, 2002, in exchange for compensation in the form of 30,000 shares of the Company's common stock. At the time the shares were issued, the Company was involved in a private placement to sell shares of its common stock at $2.50 per share. These shares of common stock have been valued at $75,000 and have been included as part of common stock value in the accompanying unaudited condensed consolidated financial statements. A related expense has been accounted for in the amount of $27,016 through September 30, 2002, with the remaining $47,984 reflected as deferred consulting fees at September 30, 2002 to be expensed over the remaining term of the consulting agreement. Two additional consulting agreements were entered into effective April 1, 2002 both having terms expiring December 31, 2002. Total compensation for services to be rendered in accordance with the agreements is $900,000. At September 30,2002, a total of 149,000 shares of the Company's common stock had been issued as partial payment for these services. By agreement, these shares have been valued at $3.00 per share or a total of $450,000, which exceeds the per share price at which the Company has been selling it's common stock in private placement transactions. This amount has been included as part of common stock value in the accompanying unaudited condensed consolidated financial statements. A related expense has been accounted for in the amount of $600,000 through September 30, 2002. The $150,000 reflected in deferred consulting fees at June 30, 2002 has been fully expenses as of September 30, 2002. The Company has recorded a liability due of $150,000 for services rendered and not paid as of September 30, 2002. On September 15, 2002, the Company entered into a consulting agreement with an individual serving as its principal financial officer. The agreement is for an unspecified period of time and provides for compensation for related services in the form of $2,000 cash per month in advance plus 1,600 shares of the Company's common stock per month. The shares of common stock earned as compensation pursuant to the agreement through September 30, 2002 have been valued at $2.50 per share consistent with similar transactions as discussed elsewhere. During the period ended September 30, 2002, the Company entered into a Membership Agreement with an entity desiring to participate in the GSL Business Partnership Network. As of September 30, 2002, the activities anticipated by this Membership Agreement and the Network have not formally commenced. Accordingly, the $10,000 membership fee received by the Company from the participant has been recognized as deferred revenue in the unaudited condensed 12 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 6 - MATERIAL EVENTS (Continued) consolidated financial statements at September 30, 2002. The Company anticipates entering into similar Membership Agreements with other individuals and entities. In July 2002, the Company entered into two additional consulting agreements with individuals to provide various services. The terms of the agreement are for unspecified periods with the compensation arrangements for one agreement providing for monthly payment of $2,000 cash and 1,600 shares of the Company's common stock with the other agreement providing for payment of 2,000 shares of the Company's common stock and no cash payment. In July 2002, the Company entered into a Strategic Alliance Agreement. This agreement provides for the Strategic Alliance representative to market and promote the Company's Global Partnership Network (GPN) in China on an exclusive basis. The Strategic Alliance representative may participate in revenue generated by the GPN through the enrollment of participants, provided certain terms and conditions are met. The formal activities and operations of the Alliance and the GPN have not yet commenced. The Strategic Alliance representative deposited $64,085 with the Company to help fund this development. If the Strategic Alliance representative fulfills the requirements per the agreement, the $64,085 will be refunded to the Strategic Alliance representative. Other similar Strategic Alliance Agreements may be entered into by the Company. On September 20, 2002 the Company entered into an agreement to acquire all the issued and outstanding shares of a British Virgin Island Corporation in exchange for shares of the Company's common stock based on certain valuation criteria. All of the terms and conditions incident to the closing of this acquisition transaction have not been completed. Accordingly, the effects of this transaction have not been included in the accompanying consolidated financial statements at September 30, 2002. In connection with this transaction, the Company entered into an agreement to issue to an unrelated entity options to acquire 100,000 shares of the Company's common stock at $0.50 per share. The intrinsic value of these options have been determined to be $200,000 and has been recognized as consulting expense in the accompanying consolidated financial statements. During September 2002, these options were exercised and resulted in $50,000 cash proceeds to the Company. 13 GSL HOLDINGS, INC. (FORMERLY BETHURUM LABORATORIES, INC.) (A Development Stage Company) Notes to the Financial Statements September 30, 2002 and December 31, 2001 NOTE 7 - SUBSEQUENT EVENTS Effective October 1, 2002, the Company entered into an employment agreement with it's President and Chief Executive Officer to provide compensation arrangements for his performance of those duties and services. This agreement runs through December 31, 2006 and provides for the Company to pay compensation equal to $20,000 per month plus a reasonable housing allowance up to $5,000 per month. As of September 30, 2002, the Company had partially compensated its President and Chief Executive Officer in accordance with this agreement with a remaining unpaid balance outstanding of $50,500 at September 30, 2002. Also, in connection with these arrangements, the Company entered into a lease agreement for the President CEO's housing consisting of an initial security deposit of $3,756 and monthly payments of $2,500. The lease expires in February 2003. On October 1, 2002, the Company entered into an employment agreement with its principal financial officer to provide compensation arrangements for his performance of duties and services. This individual was formally appointed as Chief Financial Officer and V.P. of Finance on October 9, 2002. This agreement runs through December 31, 2006. The starting salary is $96,000 per year with an annual increase of no less than 10% of the prior year's compensation. This agreement also provides for annual bonuses and for 100,000 stock options with an exercise price of $1.00 per share. The options vest over four years and expire on the ten-year anniversary of the grant. On October 16, 2002, the Company entered into a real estate lease for approximately 200,000 square feet of warehouse space. This is a five-year lease with monthly payments of $80,000. The lease will commence in February 2003. A security deposit of $80,000 will be made in conjunction with this lease. Also on October 16, 2002, the Company entered into an agreement to purchase this real estate. The purchase price is set at $20,000,000 and is scheduled to close on April 1, 2004. 14 ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION Caution about forward-looking statements This Form 10-QSB includes "forward-looking" statements about future financial results, future business changes and other events that have not yet occurred. For example, statements like we "expect," we "anticipate" or we "believe" are forward-looking statements. Investors should be aware that actual results might differ materially from our expressed expectations because of risks and uncertainties about the future. We do not undertake to update the information in this Form 10-QSB if any forward-looking statement later turns out to be inaccurate. Details about risks affecting various aspects of the Company's business are discussed throughout this Form 10-QSB and should be considered carefully. Plan of Operation for the Next Twelve Months GSL Holdings, Inc. ("GSL" or "Company") is a premier Trade Management Organization that offers diverse services to our customers in their efforts to more efficiently manage global trade relations. More specifically, GSL creates services focused on US / China relations. GSL has been created to assure, streamline, facilitate, and promote trade between China and the rest of the world. GSL's mission is to create a Global Partnership Network (GPN) in which trade between China and the Western economies can flow freely with integrity and security for all parties involved. Within the GPN community, GSL will foster trade under the World Trade Organization (WTO) rules and regulations, execute on the commitments made by China to open trade, integrate with the Western economy, and offer a more predictable environment for trade and foreign investment. Businesses worldwide are rushing to enjoy the economic benefits of trading with China. Concurrently, thousands of Chinese manufacturers previously focused only on the country's domestic sector are now beginning to pursue customers internationally. To assist both Chinese and international enterprises in this rapidly unfolding evolution in trade, GSL plans to create a network of China Trade Centers (CTC) or marketplaces, where Chinese businesses can showcase their state of the art manufacturing capabilities and products to the international business community. The key services and functions of the CTC are to provide a venue or showroom where U.S. businesses can have direct trade access to Chinese manufacturers and to their products and samples. All the competitive pricing advantages are recognized by the U.S businesses directly without any dilution from agents, promoters and middlemen. Using GSL as the facilitator for trade also ensures trust, integrity and security in every transaction. In October 2002, the Company entered into an agreement to lease and purchase an estimated 400,000 square feet facility on 23 acres of land in Pomona, California. The property is the projected location for the CTC that is anticipated to open in September 2003. The lease and purchase agreement contain contingencies, which may prevent the final closing of the transaction. During the next 12 months, the Company intends to execute its plans to make the CTC into a state of the art facility. The Company is in the process of contracting with architects, construction companies, logistical consultants and engineers to assist with the development of the CTC. During the next 12 months, GSL plans to recruit businesses and manufacturers in China as members of the GPN. In doing so, GSL will create and adopt standardized 15 processes and uniform product information catalogs on its Chinese Members and their products. Through these means, GSL enables a more efficient mechanism for US firms trying to identify potential trading partners within the labyrinth of companies in China. Through the utilization of available mature technologies, coupled with the presence of the CTC carrying inventories of sample products, GSL provides a local US conduit to these companies. In July 2002, the Company entered into a strategic alliance agreement with Pattern Logistics to enroll at least 2000 participants in China each year into the GPN for the next two years. This agreement is the first step to the aggregation of partners necessary to complete the supply side of the Company's business model. The Company cannot assure that participants will enroll in the GPN. In the continued process to fulfill the Company's mission, GSL entered into a definitive agreement to acquire Pacific Garment Manufacturing Group, Ltd., a supply chain management company specializing in the apparel/textile industry. The definitive agreement contains contingencies, which may prevent the final closing of the transaction. This acquisition is not only a revenue producing source for the Company, but provides expertise in the vertical market of apparel/textile sourcing which is a major export for China. In the next 12 months, the Company plans to identify a series of vertical markets and plans to acquire additional companies to fill those verticals. During the next 12 months, the Company's foreseeable cash requirements will relate to maintaining the company in good standing, the provision of daily operational expenses in the US and China, the engagement of various employees in the US and China, and the development of the CTC and the GPN. The Company currently does not have the cash requirement to fulfill its plan of operation. If the cash requirements necessary are not available from operations or from private sales of equity, then management or principal stockholders may make advances as loans to the Company. Any such sums would be subordinated to other debts outstanding at the time. To date, the Company has raised approximately $355,500 in private placements, both from US investors and Chinese citizens. GSL believes sufficient operating capital will be available for the remainder of 2002, however GSL cannot give assurances of that fact. Results of Operations The three and nine month periods ended September 30, 2001 are not discussed and compared with the current results because the inception date of the Company is May 17, 2001. The Company incurred losses of ($813,857) for the three months ended September 30, 2002. This is an increase of $200,298 in additional losses from the three months ended June 30, 2002. The increase in losses is a result of options exercised at below deemed value. The difference of the exercise value and deemed value was expensed. As of September 30, 2002 GSL has not generated any revenue. Consulting fees represent approximately 60% ($475,000) of the total expenses of the Company. This decrease of approximately $115,000 from the prior quarter ended is primarily due to the Company's efforts to retain full time employees, keeping the expertise in the company, instead of outsourcing. Consulting fees generally relate to consultants hired for the maintenance of all SEC filings, the performance of general financial and accounting duties, the development of business opportunities and strategic alliance partnerships, and the development of a website. Professional fees represent approximately 3% ($26,000) of the total expenses of GSL, a decrease of $15,000 from the prior quarter ended, and are a result of a decrease in the Company's business transactions. Professional fees generally relate to attorney's fees, accounting 16 fees and filing fees to maintain the Company in good standing. The remaining 37% of expenses represents operational and G&A cost of the Company. G&A costs generally relate to salary, rent expense, travel, office expense and any other cost associated with daily business operations. The G&A expenses have increased since the prior quarter mainly due to the one time expense for options exercised under the deemed value. Liquidity and Sources of Capital At September 30, 2002, the Company had total current assets of $29,023 and total current liabilities of $617,885, resulting in a working capital deficit of $588,862. In addition, to date the Company has incurred operating losses totaling $1,645,123. These circumstances have prompted the Company to include a "going concern" explanation in the consolidated financial statements for the quarter ended September 30, 2002. The Company anticipates further losses and does not know when it can reach a cash flow positive position. To date, the Company has primarily funded its operations from the sale of its common stock. The Company anticipates entering into business arrangements that it hopes will generate revenues and income to meet its operating requirements. In the meantime, the Company is dependent on the further sale of its common stock and loans from principal stockholders to provide funds to cover its operating expenses. The Company may find it necessary to secure operating funds from other sources until it can fully implement and realize success from its Plan of Operations. There are no assurances that GSL will be successful in any of these efforts. ITEM 3. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures. Based on their evaluation, as of a date within 90 days prior to the date of the filing of this Form 10-QSB, of the effectiveness of the Company's disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, the principal executive officer and the principal financial officer of the Company have each concluded that such disclosure controls and procedures are effective and sufficient to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Changes in Internal Controls. Subsequent to the date of their evaluation, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses. Part II. Other Information Item 1. Legal Proceedings To the best knowledge of the officers and directors of the Company, neither the Company nor any of its officers or directors is a party to any material legal proceeding or litigation and such persons know of no other material legal proceeding or litigation contemplated or threatened. 17 Item 2. Changes in Sercurities and Use of Proceeds During the third quarter, 1,200 shares were sold in private placements under Regulation S. These shares were sold at $2.50 per share. Additionally in the third quarter, 100,000 shares were issued pursuant to options exercised at $0.50 per share with an additional 10,000 shares issued pursuant to options exercised at $1.00 per share. In the third quarter, 14,900 shares were issued to consultants for services rendered. Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information (a) Exhibits Exhibit 1 - Definitive Agreement and plan of acquisition of Pacific Garment Manufacturing Group, Ltd. Exhibit 2 - Purchase Agreement for 1875 W. Mission Blvd, Pomona California. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 99.1 -Certification in Accordance with Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K None 18 SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the small business issuer has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 19, 2002 GSL HOLDINGS, INC. By: /s/ Luis Chang -------------------------------------- Luis Chang, President and CEO By: /s/ Henry Fan -------------------------------------- Henry Fan, Principal Financial Officer 19 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I Luis Chang, Chief Executive Officer of GSL Holdings, Inc., certify that: 1. I have reviewed this Quarterly Report on Form 10-QSB of GSL Holdings, Inc.; 2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this quarterly Report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's Board of Directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls; and 20 6. The Registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 19, 2002 Signature: /s/ Luis Chang ------------------ Luis Chang Chief Executive Officer 21 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Henry Fan, Chief Financial Officer of GSL Holdings, Inc., certify that: 1. I have reviewed this quarterly report on Form 10-QSB of GSL Holdings, Inc.; 2. Based on my knowledge, this Quarterly Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Quarterly Report; 3. Based on my knowledge, the financial statements, and other financial information included in this Quarterly Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Quarterly Report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Quarterly Report is being prepared; b) evaluated the effectiveness of the Registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this Quarterly Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the Registrant's auditors and the audit committee of Registrant's Board of Directors (or persons performing the equivalent function); a) all significant deficiencies in the design or operation of internal controls which could adversely affect the Registrant's ability to record, process, summarize and report financial data and have identified for the Registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls; and 22 6. The Registrant's other certifying officer and I have indicated in this Quarterly Report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: November 19, 2002 Signature: /s/ Henry Fan ----------------------- Henry Fan Chief Financial Officer 23 Exhibit 1 Definitive Agreement and plan of acquisition of Pacific Garment Manufacturing Group, Ltd. Definitive Agreement and plan of acquisition of Pacific Garment Manufacturing - -------------------------------------------------------------------------------- Group, Ltd. - ----------- Effective September 22, 2002, the Company and Pacific Garment Manufacturing Group, Ltd. (Pacific), a corporation organized under the laws of the British Virgin Islands, executed a Definitive Agreement whereby the Company will acquire 100% of the outstanding securities of Pacific. Although the effective date of the Definitive Agreement is September 22, 2002, contingencies exist within the agreement that should delay the closing of the transaction until such contingencies are satisfied. These contingencies include, but are not limited to, Audited Financial Statement of Pacific for the previous three years restated to meet US GAAP requirements. Pacific at the close of this transaction will become a wholly owned subsidiary of the Company. The principal terms of the Definitive Agreement are: The Company shall, on the Closing Date, have received all of the issued and outstanding shares of Pacific in exchange for shares of GSL (the "GSL Shares"), valued at $2.50 per share, in an amount equal to eight times Pacific's earnings before interest, taxes, depreciation, and amortization ("EBITDA") for the fiscal year ended March 30, 2002. The GSL Shares will be restricted against resale pursuant to the provisions of Federal and state securities laws. The PACIFIC shares to be tendered, 50,000 common, will represent all of the issued and outstanding capital interests of PACIFIC. This Agreement and plan of acquisition as contemplated is subject to the occurrence of the following, within 12 months of Closing: (a)GSL shall have the option to rescind the exchange of stock for Pacific as set forth above and void any agreements entered into incident to the acquisition, either written or oral, if Pacific's EBITDA, on the anniversary date of the first full fiscal year is negative or, for any reason deemed necessary by GSL. If GSL exercises this option to cancel the exchange, then GSL will not be responsible for any expenses incurred by Pacific. (b)If GSL exercises the option to rescind the exchange, all money invested by both parties shall be returned in full to the party investing the money. All investments during the course of the 12 months following Closing must be separately documented and auditable for purposes of being returned upon exercise of this cancellation provision. If funds are insufficient for a full return of invested capital, the funds on hand will be returned to the parties on a basis pro-rata to their respective investments. Any funds remaining after all original investments have been repaid shall be divided equally (50/50) between GSL and Pacific. 24 Upon the first anniversary of the Closing, if the market price of GSL trading common stock, as quoted on its primary trading exchange or system in the United States, and measured by the "closing" price reported on each day, falls below an average of US $2.50 per share for the 30 trading days prior to the anniversary date, then Pacific has the option to either: (a)Cancel this Agreement and return all of the GSL shares received to nullify this Agreement, if and only if, Pacific has not sold any of the shares prior to that date; or (b)Receive an additional amount of GSL shares so that the total amount of shares received, including the amounts received with the execution of the Definitive Agreement, is equal to eight (8) times Pacific's March 31, 2002, EBITDA divided by $1.50. Beyond Expectation Production Company, Ltd. ("Beyond"), the sole current shareholder of Pacific shall assume all liability and responsibility for any legal or financial transactions entered into by Pacific. Beyond will indemnify GSL for all liability during any period of time that Beyond is in management control of Pacific. The Closing shall take place at the time or place as may be agreed upon by the parties after all pre-conditions have been met. 25 Exhibit 2 Purchase Agreement for 1875 W. Mission Blvd, Pomona California. Purchase Agreement for 1875 W. Mission Blvd, Pomona California. - --------------------------------------------------------------- On October 16, 2002, the Company and Meruelo Living Trust entered into a Purchase Agreement to purchase an approximately 400,000 square feet facility situated on approximately 23 acres of land, located in Pomona, California. Although the agreement date is October 16, 2002, escrow will close on April 1, 2004 . The Company has agreed to a lease agreement with Meruelo Living Trust to occupy the facility prior to the close of escrow. The principal terms of the Purchase Agreement are: The purchase price is valued at $20 million and entails the following: (1) The Company shall, at its discretion, (i) pay to the Seller $10 million in cash, or (ii) assume the debt and/or liability of the Property not exceeding $10 million, and (2) The Company shall issue to Meruelo Living Trust one million shares of the Company's common stock; and (3) The Company shall give Meruelo Living Trust and option to purchase an additional 500,000 shares of Company's common stock at $5.00 per share. Upon the second anniversary following closing, if the price of the Company's stock falls below $5.00 per share on an average of 30 days prior to that date, Meruelo Living Trust shall receive $5 million in cash and return all the Company's stock received. Meruelo Living Trust will not be obligated to complete the sale of this property if the Company's common stock is not actively listed on NASDAQ or the NYSE. 26 Exhibit 99.1 Certifications in Accordance with Section 906 of the Sarbanes-Oxley Act of 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of GSL Holdings, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Luis Chang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a)or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Luis Chang - ----------------------------- Chief Executive Officer Date November 19, 2002 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of GSL Holdings, Inc. (the "Company") on Form 10-QSB for the period ending September 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Henry Fan, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief: (1) The Report fully complies with the requirements of section 13(a)or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ Henry Fan - ---------------------------- Principal Financial Officer Date November 19, 2002 27 -----END PRIVACY-ENHANCED MESSAGE-----